Canadian business organizations are pleading for more help as they confront an unprecedented economic downturn caused by the COVID-19 outbreak.

More than 60 business organizations teamed up on Wednesday to send a lengthy wish list to Ottawa but, above all else, they are seeking increased wage subsidies as waves of layoffs start to hit Canadian companies.

“I am very concerned that without a significant increase in the assistance made available to businesses to keep their employees on the payroll, we are going to see massive numbers of layoffs and tens of thousands of small businesses going out of business entirely,” said Perrin Beatty, the president and chief executive officer of the Canadian Chamber of Commerce. “It will mean that when we come out the other side of the tunnel there won’t be a business for employees to go back to.”

With a government-imposed shutdown keeping people out of retail stores and restaurants, the economy needs to be put on life support to keep businesses alive and ready to spring back to life when the COVID-19 crisis subsides, Beatty said.

Along with wage subsidies, the chamber is also asking governments to postpone any impending “tax increases, non-essential new regulations and unnecessary consultations.”

At a news conference on Wednesday, Finance Minister Bill Morneau said to expect more announcements about aid to businesses in the “coming days.” The government has already offered a 10 per cent wage, up to $25,000 per company.

“It’s multiple sectors. We’re looking at the airline sector, we’re looking at the hospitality sector writ large, which is facing enormous challenges,” said Morneau. “In terms of when we’ll have more to say? It will be in the very near term.”

The government will also unveil aid for Canada’s beleaguered oil and gas industry, which has endured years of economic trouble from low oil prices and now sees prices plunging even farther.

With an unprecedented economic shutdown, the government should err on the side of over-reacting rather than under-reacting, said Rocco Rossi, the president and chief executive officer of the Ontario Chamber of Commerce.

“My fear is really around the damage that’s being done. If it’s allowed to to continue, it will put at risk and slow, tremendously, the rebound,” said Rossi.

It's multiple sectors

The government has also made massive amounts of extra lending capacity available, with $10 billion available for small and medium-sized businesses through the Business Development Bank of Canada and Export Development Canada and $300 billion in extra lending capacity through private banks.

Numerous sources have told the National Post that even more lending capacity is in the works, but Rossi said the news that nearly a million Canadians applied for employment insurance last week shows more debt won’t solve the problems of small and medium-sized businesses.

“If credit facility was going to solve things, you wouldn’t have seen a million applications (for EI). And that’s because many of those businesses simply can’t afford to go into more debt,” said Rossi.

With all the uncertainty in the economy, many businesses will be apprehensive about taking on more debt and some may not even be able to, said Ken Kobly, the president and chief executive officer of the Alberta Chambers of Commerce

“At this point, in particular, in Alberta, where we’ve gone through four or five years of challenging times, it’s pretty difficult to suggest to a small business that they need to go out — or it may be impossible for them to go out — and get additional funding financing from the banks,” said Kobly

Canadian Chamber of Commerce President Perrin Beatty.Jim Wells/Postmedia/File

Both Beatty and Rossi said that cash flow is the problem for most small businesses and that wage subsidies are the best way to provide that.

Business groups have pointed to the United Kingdom and Denmark, where wage subsidies have reached levels as high as 80 per cent of a worker’s salary. But there are some key differences in Canada’s situation and it may be an indication of quirks in the way government’s transfer money to people.

In Canada, parental leave benefits flow through the employment insurance system, while in the United Kingdom they are subsidies that flow through the employer. Similarly, Canada’s COVID-19 relief runs through the EI system and the UK’s relief flows through wage subsidies.

In the U.K., the 80 per cent subsidy covers up to £2,500 (4,220) per month and would place employees on a leave of absence, rather than laying them off.

Beatty argued that a wage subsidy for businesses would take some of the pressure off the employment insurance program. It would also allow people to maintain their health benefits and some kind of connection with the company, which would allow a quick re-hiring process if the economy springs back to life.

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